Question.617 - You are the sales department manager for a U.S.-based company that builds engines for the automotive manufacturing industry. Your company is considering diversifying into other business opportunities where your motors can be sold in order to bolster the company’s portfolio and increase revenue. Based on your knowledge of the national sales landscape, your manager would like you to conduct preliminary research and prepare a presentation with your recommendation for opportunity in a new industry that will allow for this diversification through a new sales division and increased sales. You have been asked to make your presentation at the next stakeholder meeting, where you will address internal stakeholders from across the company as well as external stakeholders such as customers, investors, and suppliers. As a preliminary step in developing this presentation, your manager would like to see an executive summary of your research findings and evaluate your decision modeling. Directions Complete the Project One Worksheet in your Soomo webtext and submit it for instructor feedback. Part 1: Define You will first conduct research on the U.S.-based automotive manufacturing industry using the Shapiro Library database links provided in the supporting materials section below. Then, prepare an analysis report that addresses the following: Define the problem. Explain the type of qualitative and quantitative data you will be targeting in your research. Provide a broad description of the U.S. automotive manufacturing industry and its value. Include: Total value of the industry Sales by region Sales by fuel type: electric, hybrid, and gas Describe the current trends in the automotive market. The trend toward different types of motors for the vehicles being made and sold, such as electric and hybrid Trends in customer demands such as vehicle color, extra features, and styles Trends in the body types of vehicles sold (SUVs, trucks, sedans) Part 2: Research In Module One, you chose an industry that you think would provide opportunity for your company. Now, using industry-specific and scholarly resources to inform your decision, prepare an industry analysis report that includes the following: Provide a broad description of the new industry. Describe the overall attractiveness of the industry. Is this a growing industry? Is this an industry that has a lot of growth potential? What outside factors are affecting its growth? Identify the factors that have allowed competitors to be successful in this industry thus far. Summarize the overall value of the industry. How is the industry currently trending? Summarize the sales. Speculate if sales vary based on the region of the country. (For example, there would be very few snow plow sales in the southern United States, if any at all.) Define expected growth areas. Describe the current market trends for the new industry. What products or services are trending? What are some current customer demands? Perform a Porter’s Five Forces analysis to determine the potential success of moving into this new industry. Explain your rationale. Part 3: Compare Compare the two industries and summarize your findings. Perform a Porter’s Five Forces analysis to compare the two industries. Summarize how your findings address the problem.
Answer Below:
BUS 225 Milestone One Template Executive Summary Stacy Speidel March 20, 2022 Description of Problem The pandemic has hit many industries, while the COVID-19 did not spare automotive industry. There was a sharp decline in the sales in the previous two years. The qualitative and quantitative analysis are the two comprehensive tools that provide the best approaches to the industry to get the most effective results. Quantitative research is useful for forecasting future automotive trends, particularly in the revenue-generating sales and after-sales divisions. The qualitative data the summary will be targeting corresponds to policies and approaches that need to be supported in the industry, providing a competitive edge over the rivals in the automotive industry. These policies pertain towards sustainability and taking a holistic approach in manufacturing. In comparison, the quantitative data analysis will offer the data on the stock price performance of the automotive companies and their relative effect on the market. Description of the Current U.S. Automotive Industry The U.S. Automotive Industry is one of the leading industries, it has one of the largest automotive markets in the world. The car and automotive industry are around $86.2 billion. The growth has been highest during the year 2016, while there has been a sharp decline in the U.S. Automotive industry, it has declined 7.8% per year on an average between 2017 and 2021 (Driving US Economy and Innovation | Alliance For Automotive Innovation, 2021). New car sales are critical to the automotive industry's success. There have been many fluctuations in the automobile sales due to various reasons, one of the prominent reasons is Pandemic. New automobile sales are predicted to grow in 2021 with the decline in Pandemic. According to NADA data, the total light vehicle dealership sales topped $600 billion. The nations 16,658 franchised light-vehicle dealers sold 8.3 million light-duty vehicles (NADA Data 2021:Mid Year Report, 2022). Current Automotive Market Trends Future is the key for the number of automotive industries. Zero carbon emission, zero crashes and minimal congestion is the current trend in the automotive industry. At the moment, significant global trends are pushing and pulling the automotive industry in numerous directions. Automobile manufacturers are hurrying to create new technologies and bring their products into compliance with strict new regulations, all while striving to stay profitable in adverse market conditions. Autonomous vehicles, solid-state battery development, vehicle light weighting, shared mobility, and mergers and acquisitions are all major topics in the sector (Industry Profiles, 2019). A transformation to all electric vehicles is a path to zero emission in the future. A new flexible way of manufacturing cars is the use of Ultium battery systems which pave a new way to build EV's across the industry. In keeping these trends into account, the automotive industry plans to rake up its production capacity of electrical vehicles to around 600,000 units by 2023. Since sustainability is the new tool in the automotive industry, as it would enhance different ways to combat climate change. Description of the New Industry Supplying the motors to the transport industry would be one of the feasible solutions that would help the formal automotive sector to rake up the business. The public transport agencies operate on the same page as regional passenger transportation systems. There will be many cars that would require a replacement due to its frequent wear and tear process. Joining hands with one of the agencies that provide cars or heavy transport vehicles will benefit the previous automotive company. The transportation sector is one of the huge sectors in U.S industries. The transportation industry has a massive impact on the economy. The today transportation industry is not restricted to an easy commutation of people. Even ordering from amazon or any e-portal sites, the transportation industry comes into picture. According to a report in IBIS world, the revenue of the transportation industry was heavily impacted by the COVID-19 pandemic; however, in the coming years, the revenues will surge up as there is enormous government assistance and bipartisan infrastructure deal could provide long-lasting advantages for the industry. In 2021, the federal funding for the public transportation industry was a massive $158 billion (Lang, 2022). Current Market Trends in the New Industry It is predicted that the public transportation industry and the freight transport industry will grow at a multiple rate. Today e-commerce industry is one of the booming industry, and shipping goods plays a significant role in each part of the economy. On the other hand, as most of the population in densely populated regions that is the urban population rely on public transport, the population growth will generate demand for public transportation system, or urban transit networks. Increased traffic congestion places a burden on local infrastructure and travel efficiency, yet expanding roadways in densely populated areas is generally difficult (Lang, 2021). In the coming years, it is In 2021, the urban population is predicted to grow, creating an opportunity for the business. Even though ridership has declined due to pandemic, there has been a stable growth in the revenue in past five years. Due to COVID-19 Pandemic, the industry suffered a loss, as a result, revenue growth in the business has been constrained, with annualized increase of 2.2 percent to $83.3 billion during the five years through 2021, including a 2.4 percent fall in 2020. In 2021, however, industry revenue is predicted to increase by 5.2 percent (Lang, 2022). The industry is going to see a further progress as there is unemployment which makes people to opt for public transport, at the same time changing and volatile crude oil prices or gas prices have influeneced the users to opt for public transportation this will prioritize people to opt for public transport. Appendix AExplanation from Porters Five Forces Analysis of the New Industry Porters five forces include the threat of new entrants, power of buyers, power of sellers, the threat of substitute products, competition within the industry. Porters five force analysis will help derive the key factors that will influence profitability in the transportation industry. The new entrants in the transportation industry will bring innovation that will indirectly pressure the new industry to perform better under various circumstances. The new industry has to look through a perspective of revising the cost or delivering a lower price strategy and offering a new value proposition to the customers (IBIS World team, 2020). To mitigate the threat from new entrants, the new industry must invest more into research and development that will help in innovation, and at the same time it will also bring new customers into the market. Power of suppliers- Most of the companies in the transportation industry buys their raw materials from different suppliers. In contrast, the suppliers in a strong position will have control over this new industry. The overall impact of this higher supplier power will be the lowering total profitability of the transportation industry (IBIS World team, 2020). To combat this crisis, the new industry should build upon an efficient supply chain with multiple suppliers, which will give them a grip over the industryimproving dedicated suppliers whose businesses depend on the firm. Power of Buyers: It is a known fact that buyers demand a lot, they want the better value for their money without spending more of their money. If there is a smaller customer base, it will not allow the new transportation industry to explore their profit margins. In order to understand the power of buyers it becomes vital for the new industry to build a large customer base. The threat of substitute products: The automotive industry is coming up with electric vehicles or hybrid vehicles that will enable most of the population to travel in their vehicle, independent of an increase in gas prices. It can be maneuvered if the new industry will focus on services rather than the product of the new industry. Competition within the industry: If there is intense competition within the industry it will drive down to the prices and profitability of the industry. The new industry sector must build upon sustainable differentiation and build the domain to complete it better. Appendix BSummary of Findings from Porters Five Forces Analysis Comparing Both Industries Automotive industry is one of the most competitive industries in the world, while the American automotive industry is made of different players. If we analyse both the industries on Porters five forces, it can be observed that automotive industry will not be hit by a threat of new entrant as it requires a huge a capital investment, while the existing players are benefitted by the competition. At the same time the new entrant into the market finds it difficult to leverage with a competitive pricing. While the new industry has to face the threat in the form of innovation, where the industry has to put efforts into it. Threat of substitutes is huge for automotive industry as the industry relies on fuel prices and congestion is one other issue, that leads a major urban population to opt for public transport industry. At the same time, the automotive industry investing a large sum of money on the research and development of electric vehicles and hybrid vehicles proves to be a substitute in the new industry. There is a subsequent a little or marginal threat when it comes to bargaining power of suppliers. As the suppliers are dependent on labor parts, supplies and raw materials. While, the new industry has to deal with a strong positioning of supplier and it has to deal with the same through negotiations. The automotive industry has to deal with two types of buyers which include customers and dealers, therefore it becomes imperative to understand that the buyers are placed highly, in the automotive industry and it is the same for the new industry as most of the revenue generation takes place through buyers. There is a huge and severe competition in the automotive industry and the new industry does not have to deal with any such severe competition. Appendix A Automotive Industry Appendix B New Industry: Transportation Industry References: Autosinnovate.org. 2021.?Driving US Economy and Innovation | Alliance For Automotive Innovation. [online] Available at: <https://www.autosinnovate.org/initiatives/the-industry>. Advantage-marketline-com.ezproxy.snhu.edu. 2019.?Industry Profiles. [online] Available at: <https://advantage-marketline-com.ezproxy.snhu.edu/Search?industry=2800003>. IBIS World team, 2020.?Using Porters Five Forces to Develop Business Strategies - Industry Insider | IBISWorld. [online] Industry Insider | IBISWorld. Available at: <https://www.ibisworld.com/blog/using-porter-s-five-forces-to-develop-business-strategies/99/1127/>. Lang, C., 2022.?Public Transportation in the US. [online] My-ibisworld-com.ezproxy.snhu.edu. Available at: <https://my-ibisworld-com.ezproxy.snhu.edu/us/en/industry/48511/about>. Nada.org. 2022.?NADA Data 2021:Mid Year Report. [online] Available at: <https://www.nada.org/WorkArea/DownloadAsset.aspx?id=21474864928>. Statista. 2022.?Global car sales 2010-2021 | Statista. [online] Available at: <https://www.statista.com/statistics/200002/international-car-sales-since-1990/#:~:text=Worldwide%20car%20sales%20grew%20to,pandemic%20in%20all%20key%20economies.>.More Articles From Strategic Management
.ico)
.ico)
.ico)
.ico)
